Chaga mushroom (Inonotus obliquus) has been used for a long time as a folk medicine for treating multiple diseases in several parts of the world without rendering any undesired toxicity. In this study, I. obliquus polysaccharides (IOP) were extracted and assessed to determine their anti-tumorigenic potential in human lung cancer cell lines NCI-H23 and A549 using cytotoxicity and apoptosis assays. MTT assay revealed a significant reduction in the cell viability (p < 0.05) for NCI-H23 and A549 cell lines exposed to IOP (5-200 µg/mL) in a concentration-dependent manner with IC50 of 100 µg/mL for both cell lines. Cell lines exposed to 50 and 100 µg/mL of IOP were further analyzed. IOP arrested the cancer cell growth at G0/G1 stage that can further implicate an anti-proliferative effect in cancer cells. Intracellular reactive oxygen species (ROS) generation was detected using DCFH-DA dye demonstrated increased levels of ROS generation (p < 0.05). Assessment of mitochondrial membrane potential using JC-1 dye exhibited decreased membrane potential, characterized by the low dye-intake, as shown by flow cytometry. In addition, Annexin-V/FITC analysis using flow cytometry demonstrated a significantly increased number of apoptotic cells (p < 0.05) in both cancer cell lines in a concentration-dependent manner. These results showed that IOP can induce apoptosis in both tumor cell lines, and therefore might be considered as an effective anti-tumor agent that could be further exploited in clinical settings.